SEC CHARGES TWO FORMER OFFICERS OF CYBERCARE, INC., AND A FORMER OUTSIDE ANALYST WHO COVERED CYBERCARE, WITH FRAUD

The Securities and Exchange Commission (Commission) announced that on July 16, it filed a complaint alleging securities fraud against two former officers of CyberCare, Inc. The SEC's complaint alleges that from at least December 1999 to May 2000, CyberCare, through Michael Morrell, its chief executive officer (CEO), and John Haines, one of its senior vice-presidents and the president of its technology division, issued false press releases and made fraudulent presentations to the public regarding orders or agreements for the sale of the Company's Electronic HouseCall System that were non-existent or grossly exaggerated. In addition, the press releases made baseless projections about future orders with entities that lacked the financial wherewithal to consummate the deals.

The complaint also alleges that Morrell and Haines reviewed and signed a Form 10-KSB that CyberCare filed with the Commission in April 2000 that they knew contained some of the same false information included in the press releases.

Finally, the complaint names as a defendant Paul Bornstein, a former registered representative of Connecticut Capital Markets LLC. According to the complaint, Bornstein created a Research Report on CyberCare in January 2000 that placed a Strong Buy recommendation on CyberCare's stock and a 12-month price target of $52 per share on CyberCare's stock (which was quoted on the NASDAQ at $11 per share at the time). The complaint alleges, however, that the research report failed to disclose that at least part of Bornstein's optimism about CyberCare resulted from his simultaneous employment by CyberCare's public relation's firm. CyberCare had hired the public relations firm in October 1999, and paid the public relations firm a monthly fee of $4,000, plus 24,000 shares of CyberCare stock. The public relations firm, in turn, paid Bornstein a monthly salary of approximately $7,500.

Based on this alleged misconduct, the complaint charges Morrell and Haines with violating Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and, as control persons pursuant to Section 20(a) of the Exchange Act, for CyberCare's violations of Sections 10(b) and 13(a) of the Exchange Act, and Rules 10b-5, 12b-20, and 13a-1 thereunder. The complaint also charges Bornstein with violations of Sections 17(a) and 17(b) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The complaint seeks permanent injunctions, civil money penalties, and disgorgement plus prejudgment interest against all defendants, and officer and director bars against Morrell and Haines.